KPMG’s Week in Tax: 31 July - 4 August 2017 | KPMG | LU

KPMG’s Week in Tax: 31 July - 4 August 2017

KPMG’s Week in Tax: 31 July - 4 August 2017

Tax developments or tax-related items reported this week include the following.

1000

Related content

Europe

  • Belgium: There is an agreement on corporate tax reform, to be effective in two phases—once in 2018 and then in 2020—and among the items are proposals for a reduction of the corporate income tax rate to 29.58% (including the crisis contribution) as from assessment year 2019, and 25% as from assessment year 2021.
  • Belgium: A proposal would, beginning 1 January 2018, subject immovable property lease agreements to value added tax (VAT). This change in treatment would allow input VAT deductions on the acquisition or construction of the property and recovery of VAT on lease payments by tenants. Until now, the lease of immovable property in Belgium has been exempt from VAT.
  • Russia: The federal tax service revised the country “blacklist,” removing the British Virgin Islands and the Republic of Korea. 
  • Italy: A tax ruling clarifies that a demerger followed by a transfer of shares in the demerging entity is not an “abusive transaction,” provided that: (1) there is a continuation of the business activity of each participating company; and (2) the companies involved pursue actual business activities and do not only contain cash, intangibles or real estate.
  • Germany: In cases on referral from the German federal tax court, the CJEU Advocate General issued an opinion concerning the requirements as to what is a proper address on invoices for purposes of the deducting input VAT, and finding that a letterbox address may be sufficient.  

Read TaxNewsFlash-Europe

Asia Pacific

  • Vietnam: Guidance from the tax authority addresses when compulsory insurance contributions are deducted from net income before gross-up and paid as salary to an individual.
  • India: The Bombay High Court held that capital gains in respect of a transfer of shares of an Indian company, by a Mauritian company, is not taxable in India under the India-Mauritius income tax treaty.
  • India: A new application software is available for purposes generating a “certificate of coverage” for social security contributions in the host countries for outbound employees with which India has signed social security agreements.
  • India: The Bombay High Court held that capital gains directly credited to the capital reserve account (instead of the profit and loss account) cannot be considered for purposes of computing book profit under certain tax law provisions.
  • China: The tax implications of public-private partnership projects in China need to be considered in advance of currently pending legislation. 
  • Pakistan: Certain requirements under the Companies Act, 2017 are applicable to companies that have their financial year closure after 30 June 2017.

Read TaxNewsFlash-Asia Pacific

Transfer Pricing and BEPS

  • Hong Kong: A government report sets out the foundation for a transfer pricing regime, reflecting certain base erosion and profit shifting (BEPS) measures and expected to be enacted in late 2017.
  • India: The first round of country-by-country (CbC) reports must be filed with the Indian tax authorities by 30 November 2017. 
  • India: A tribunal issued a decision finding, in part, that foreign exchange fluctuation gains or losses were an operating item, and thus not excluded under the arm’s length price standard. Addressing a separate issue, the tribunal concluded that windmill-related income was to be excluded from the taxpayer’s steel manufacturing-related operating income in computing the arm’s length price.
  • OECD: A joint initiative of the IMF, OECD, UN, and World Bank Group is seeking public feedback on a “draft toolkit” that is intended to help developing countries address the complexities of taxing offshore indirect transfers of assets.

Read TaxNewsFlash-Transfer Pricing and TaxNewsFlash-BEPS

Africa

  • Mauritius: Tax provisions in the Finance Act 2017 include tax incentives for the “green economy” research and development, and a reduced corporate tax rate on income from the exports of goods.
  • Ghana: A “tax card” sets out basic information about the income tax law.

Read TaxNewsFlash-Africa

Americas

  • Canada: Ontario is accepting comments—due by 28 August 2017—on a proposal to modify the land transfer tax rules.
  • Canada: Retailers must adapt quickly and efficiently to meet their indirect tax obligations and to manage tax and reputational risks.

Read TaxNewsFlash-Americas

FATCA / IGA / CRS

  • Ireland: Irish Revenue’s common reporting standard (CRS) reporting facility is now available to file 2016 CRS returns, and the CRS reporting deadline with respect to the calendar year that ended 31 December 2016 has been extended to 4 September 2017. Also, FATCA guidance notes have been published.
  • Cayman Islands: An updated version of guidance notes addresses aspects of the CRS that are specific to the Cayman Islands. The AEOI portal will continue to accept late registrations or variations before the reporting deadline of 31 August 2017.
  • United States: An updated list of “frequently asked questions” (FAQs) from the IRS addresses entities that missed the 31 July 2017 deadline for renewing foreign financial institution (FFI) agreements.
  • Pakistan: Guidance on aspects of the CRS optional provisions include: (1) the annual deadline to submit CRS returns is 31 May of each year, starting from 31 May 2018; and (2) financial institutions must have registered with the tax authority by 31 July 2017.

Read TaxNewsFlash-FATCA / IGA / CRS

Trade & Customs

  • United States: The U.S. Court of International Trade issued a decision granting summary judgment for the government with respect to the tariff classification of imported items that resemble candles and that use battery-powered light-emitting diodes (LED). 
  • EU: The trade agreement between the EU and Canada will provisionally enter into force on 21 September 2017. 

Read TaxNewsFlash-Trade & Customs

United States

  • The U.S. Court of Appeals for the Eighth Circuit found that a railroad that paid employees in stock and that made “ratification payments” to union-member employees was not required to pay taxes on these amounts under the Railroad Retirement Tax Act (RRTA).
  • A quarterly list of countries that require (or may require) participation in, or cooperation with, an international boycott was released by the U.S. Treasury and did not reflect any changes to the list of countries. 
  • A Cook County (Chicago) court dismissed a lawsuit filed by the Illinois Retail Merchants Association and several grocery stores alleging that imposition of the Cook County sweetened beverage tax violated the Illinois Constitution and that the tax ordinance was impermissibly vague. The court dissolved a temporary restraining order (TRO), and the beverage tax collection was to begin 2 August 2017.
  • An Arizona trial court held that the taxpayer’s gross income from operating an “erotic” dancing establishment was taxable under the state’s transaction privilege tax (TPT) “amusement” classification.
  • The New Hampshire Department of Revenue Administration issued a ruling that mergers of multiple entities (LLCs) that would have no ownership change nevertheless would trigger application of the state’s real estate transfer tax.
  • Nevada’s commerce tax returns for the tax period 1 July 2016, to 30 June 2017, is due 14 August 2017.
  • The Texas Comptroller’s office announced a change to its policy concerning the franchise tax, and specifically concerning when taxpayers may apply the temporary credit for business loss carryforwards.
  • The Puerto Rico Treasury Department released guidance about when prepayments of sales tax (IVU) on a bi-weekly basis, are required—the first prepayments are due by 15 August 2017 for certain “large taxpayers” and 15 September 2017 for other affected taxpayers.

Read TaxNewsFlash-United States

 

  • The IRS posted a draft version of the instructions for Schedule J (Form 1040) on income averaging for farmers and fishermen.
  • The IRS posted a draft version of Form 1099-PATR, Taxable Distributions Received From Cooperatives, that is proposed for reporting information for 2018.

Read TaxNewsFlash-Cooperatives

© 2017 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Request for proposal

 

Submit